If you are looking at buying an investment property, these are our Top 3 tips for making it a success:
Never rush into a property investment. Making the wrong decision could be very, very costly, so you want to be sure you’ve done your research and understand the market.
You need find out how much properties are selling for in the areas you’re looking to buy in and what can you get for your money.
What are the rental demographics and will the property appeal to tenants? What rental returns can you expect? What major works or developments are planned nearby? Are you buying in a boom or a slump?
Attend open houses, check sales figures, read market reports and talk to real estate agents so you know when the time comes to make an offer, you’re not paying over the odds.
The purchase price of your property is just the first of a long list of expenses it will incur. Make sure you can comfortably afford your mortgage repayments and factor in the possibility of the property sitting vacant for a couple of months.
Talk to our lending managers and your accountant about all the fees and charges involved with the purchase and servicing of your loan (stamp duty, lenders insurance, agent fee, annual interest cost) and also consider long-term and ongoing costs such as council rates, land tax, agent fees, insurance and maintenance.
Will the home need to be restumped at some point? That’s a big expense. A modern unit might require less upkeep than an older-style home, but you’ll need to factor in body corporate fees when doing your sums.
Of course expenses will be tax deductible, so make sure you’re crunching the numbers in real terms.
Not all property managers are equal. The best will come recommended by word of mouth. A good agent is someone you feel comfortable talking to, who offers advice on property law and tenant management and acts promptly when problems arise.
Unresolved issues can quickly result in angry tenants and expensive repairs. If any alarm bells are ringing after you interview an agent, keep looking.
Once you’ve chosen someone, don’t rely on them completely to ensure your property is being looked after. No-one knows or cares about your investment property as much as you do, so arrange annual inspections to be on the look out for serious issues that your tenants might not mention or your property agent might miss.
Our tips for finding a good property manager:
Narrow down your selection by zeroing in on property managers in your area. Local knowledge is essential when it comes to the real estate industry, and hiring a local property manager who knows how to attract tenants and what rent to charge is critical.
Aside from online reviews, consider relying on word of mouth. Ask family members and friends who have experience with investing in properties in the local area. Real estate agents and property owners will also be able to share their personal reviews.
Cheaper is not always better. The same holds true for property managers. It may be unwise to hire someone just because they offer the lowest fees. Bear in mind that you often get what you pay for. Having said that, it is also crucial to set a budget. You don’t want to spend more than you need to for a property manager.
Create a list of potential property management companies and ask questions about the services that they offer, how they communicate with their clients, track records, etc. Ask for their licence and certifications, as well as the number and type of properties that they currently manage in the local area.
Not all property managers are created equal, so asking questions like this is essential to clearly see who best meets your requirements.
Tags: investment property | refinancing